This is a blog by a former CEO of a large Boston hospital to share thoughts about negotiation theory and practice, leadership training and mentoring, and teaching.

Sunday, January 14, 2007

The Harvard Medical System

After a recent news story in which yours truly was seen to a bit critical of one of his hospitals, a trustee from Partners Healthcare System asked one of our trustees, "Are we competing or cooperating?" Our person gave the right answer, "Both."

There, in a nutshell, is the story of Harvard Medical School and its affiliated teaching hospitals. This is worth some explanation.

HMS is a research institution and a school for undergraduate medical students. Unlike many other medical schools, HMS does not own and operate a hospital. Instead it has affiliation agreements with a number of hospitals in Boston (BIDMC, MGH, Brigham and Women's, Children's Hospital, Dana Farber Cancer Institute, Joslin Diabetes Center, Mass Eye and Ear Infirmary, among others). Those affiliation agreements (amounting to a one-page letter between MGH and Harvard to longer documents for later arrivals to the system) state that the hospitals will train HMS students, will cooperate with HMS in other medical and civic responsibilities, and will follow the rules of Harvard University with regard to faculty and other academic matters.

The doctors and researchers in the Harvard hospitals are faculty members of HMS. Their promotion process is subject to the governing rules and processes of HMS. They are subject to stringent HMS conflict of interest rules. They have certain HMS civic responsibilities, notably to teach undergraduate medical students. Like faculty at the University, they are expected to be among the best in their field and to have a national and international impact on clinical care, research, and/or teaching. Indeed, when a search is undertaken for a new department chief at one of the hospitals (e.g., Chief of Medicine at BIDMC), the search committee is appointed by the Dean of HMS and comprises high-level faculty members from a number of the hospitals.

But, with few exceptions, the faculty are not paid by Harvard. Their salaries are paid by the hospitals or by the physician organizations in the hospitals -- based on clinical, research, teaching, or administrative activity.

This somewhat informal arrangement has worked well for decades, has created tremendous loyalty within the system, and has contributed to the strength of both HMS and the hospitals.

But, recall that the hospitals are independent non-profit entities, each with its own public charter, and each governed by a community-based board of trustees with a fiduciary responsibility to their institution and to the public. Part of that fiduciary responsibility is to stay financially healthy -- which in the marketplace of health care mean to compete successfully.

The result is a curious mix of cooperation and competition among the Harvard hospitals. As loyal members of the HMS system, we cooperate fully in recruiting, evaluating, and promoting faculty members; in educating medical students; in designing multi-institutional research programs; in sharing basic science and clinical research results; and in carrying out joint programs to improve patient quality and safety. But in the arena of clinical care, there is intense competition for market share, to be the most attractive place for patients for cardio-vascular services, organ transplantation, cancer treatment, or other important types of tertiary care.

This means that we vie to be the first choice for patient referrals by primary care doctors and specialty physicians in the community. After all, most patient visits to hospitals are the result of those referrals, not individual decisions by consumers. Thus, each hospital tries to create a referral network -- either by ownership, insurance contracting, or personal relationship -- that will enhance the flow of patients to that institution. Each hospital, too, engages in marketing to strengthen those same referral patterns. (By the way, this is not limited to the Harvard hospitals. New England Medical Center, St. Elizabeth's, and Boston Medical Center join in the region-wide competition.)

Since all of the Harvard hospitals provide excellent care, newspaper reports and other public commentary tends to focus on these battles for referrals. Look for that to continue.

But, also look for whole-hearted cooperation to continue among the HMS "cousins" -- in areas that are ultimately more important than the forays over market share.

4 comments:

Anonymous
said...

Wondering if you saw the article in yesterday's Wall Street Journal -- kind of a 'good guys finish last' theme -- and whether you had any comments about it.http://online.wsj.com/article/SB116857143155174786-search.html?KEYWORDS=virginia+mason&COLLECTION=wsjie/6month

Didn't get to read it, but I am quite familiar with Virginia Mason's program to apply the Toyota LEAN process into hospital operations. They reduced waste (e.g., with regard to MRIs and other imaging) so much that they started to have financial problems because a high percentage of their income had been derived from those services. So, they then had to renegotiate a new payment schedule with the insurers.

When doctors refer a patient to a hospital for a significant procedure (cardiac surgery, cancer care, etc.), what are the key criteria that they evaluate in deciding which hospital the patient will be sent to? Do the docs have any information with respect to cost-effectiveness at their disposal? If not, why not?

On the second point first, doctors do not have information with regard to cost-effectiveness of a hospital. That would require public disclosure about the cost of the procedures at the various hospital. Actually, not the cost, but the price that the hospital gets paid by the insurance company. This information is not available to the public. See my posting and related comments on September 29 under "Transparency."

On the first point, most community doctors base their referral decisions on the previous experience they, their colleagues, or their patients have had with specialty doctors in the various tertiary hospitals. They are unlikely to base their recommendation on specific statistical data. Why? For one thing, those data are not published. For another, when published, they are often out-of-date or inaccurate. See my October 16 posting entitled "Not transparency."

By the way, in the last few weeks, I have been told that the data I have published on this blog on various topics (e.g., on hospital mortality, central line infections, whipple procedures) is among the most revelatory that many people have seen. If so, that is a terrible indictment of the entire medical system.